Thursday, October 18, 2007

The housing slump and Education

Housing slump affects sales tax collections |

Georgia's tax collections fell slightly last month, following a trend across the country where the housing slump has begun to affect state budgets and sparked talk of spending cuts for education and health care.
As houses depreciate, property taxes will inevitable be reduced. Not only will their be less property taxes collected, but spenders will also cut back on a lot of discretionary spending, causing a reduction in sales tax collections.

Education will be a primary target for local and state governments, when they look to make spending cuts.

The hardest hit areas are going to be large cities with a significant portion of poor and minority students. Reduced funding won't make all that much difference to well funded middle class suburban school districts.


Brett said...

I agree that the downturn in housing and property taxes are going to hit education, perhaps fairly hard. But I don't understand why you think it's going to be disproportionately hard on poor/minority students.

I think that cuts will be spread across the board, and will be felt in all markets whether or not they're directly hit by the subprime fiasco. even though defaults will be most pronounced in a few areas, the states won't change the allocation of their reduced funds, and even those states that didn't get hit directly will feel the ripple effects across the economy.

As examples, Detroit and St. Louis (both high poverty) will only get dinged a little, mostly from state reductions and the national slowdown, while Miami (both high and low SES schools) will spread the significant pain evenly across their schools, possibly even slanting towards stronger cuts for the affluent schools.

What do you think?

concernedCTparent said...

I think small towns where residents foot a huge portion of the education tab will be hardest hit. Urban schools that benefit from grants and special funding may not feel the pinch quite as drastically. Most urban schools benefit from commercial tax revenue where smaller town have more limited access and depend on homeowners for the majority of education fundng. If that takes a hit, those schools will to. Many already are feeling it.

concernedCTparent said...

If that takes a hit, those schools will too.

Parentalcation said...

Though middle class and high SES schools will suffer, I don't think the impact will be as great for several reasons.

1. many middle/high SES neighborhoods will quickly adapt to the change in funding, and be able to supplement the school budgets.

2. Middle class students are not going to be as negatively affected academically by a decrease in funding. All the extra funding goes to eyewash and extra curricular activities.

I think the national housing market as a whole is going to suffer, and in times of need, lets not kid ourselves, the poor suffer the most.